West Central Reporter

The Illinois economy shrank by $183 million per day during the COVID-19 shutdown, according to an analysis by the Illinois Policy Institute (IPI).

“The decline in economic activity has wiped out all of the jobs created in Illinois since the end of the Great Recession,” said the analysis.

Since the COVID-19 shutdown in March, Illinois’ gross domestic product has declined by 7.4% when calculated on an annualized basis, the authors wrote.

“For context, during the worst period of the Great Recession, economic activity was 5.5% lower than at the previous peak in December 2007,” they concluded. “Unfortunately, fiscal mismanagement resulted in an anemic Illinois recovery with real gross domestic product growing at an average annual rate of only 1.29% since the trough of the Great Recession in June 2009.”

During the COVID-19 pandemic, the unemployment rate in Illinois climbed to nearly 18%, which was 50% higher than in the worst days of the Great Recession. If business closures from the coronavirus turn out to be temporary, there will be less long-term damage. But the longer the shutdown continues, the more likely the damage could be permanent, the authors said.

“If economic activity does not return to levels observed before many states implemented stay-at-home orders, nearly 85% of U.S. restaurant owners expect to be closed permanently,” they wrote. “That number falls slightly to 78% for personal service firms, 73% for firms in tourism and lodging, and 65% for firms in the arts and entertainment.”

A proposed progressive income tax in Illinois on the ballot in November will not help prospects for a recovery, the analysis said. The tax would impose a hike of up to 47% on “small businesses that survive the lockdown,” IPI wrote.

“The Illinois economic recovery will depend on many factors,” the authors said. “Most importantly, workers must feel confident it will be safe to return to work. Consumer confidence must also return to pre-COVID-19 levels.”